Why consumers are so pissed

Here’s a great little post from Deutsche Bank chief economist Adam Boyton via the SMH blog.

Deutsche put together a chart plotting annual change in nominal GDP per person, deflated using the consumer price index, to calculate the change in how much every consumer can buy year for year.

‘‘This gives us a guide to whether the economy is able to produce higher living standards (positive growth in the chart) or not (negative growth),’’ Boyton says.

The result is the economy has been unable to deliver higher living standards for the past two years, and a rise of just 2.6 per cent over the past five years.

‘‘This is quite unusual,’’ Boyton says, adding that the last time there were back-to-back declines in living standards was during the recessions of the early 1980s and 1990s.

That says it all about our current population ponzi economy. Nice to look at, much worse under the bonnet. It will go on and on as the terms of trade fall.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.